NZ Tax Codes Explained 2026 — M, ME, S, SH, ST, CAE & More

Using the correct tax code ensures the right amount of PAYE is deducted from your wages. The wrong code leads to either a surprise tax bill (underpayment) or giving IRD an interest-free loan (overpayment). You notify your employer of your tax code using the IR330 form.

Full List of NZ Tax Codes

Primary Employment (Main Job)

Secondary Employment (Second Job / Additional Jobs)

Add SL to any secondary code if you have a student loan (e.g., S SL, SH SL).

Casual Agricultural Workers

Elected Not to Receive IETC

If you receive Working for Families or otherwise do not qualify for IETC, use M rather than ME.

No-Notification Rate

If you do not provide an IR330 to your employer, they must deduct tax at 45% — the highest possible rate. Always provide an IR330.

Choosing the Right Code: Decision Guide

Step 1: Is this your main (or only) job?

• Yes → Go to Step 2
• No → Use a secondary code (SB, S, SH, ST, SA) based on combined income

Step 2: Do you have a student loan?

• Yes → Add SL (e.g., M SL or ME SL)
• No → Continue

Step 3: Is your income $24,000–$48,000 from all sources, and you do not receive Working for Families?

• Yes → Use ME (to receive the IETC through your wages)
• No → Use M

How to Fill In an IR330

The IR330 (Tax code declaration) is given to you by your employer when you start work. You fill in:

1. Your full name
2. IRD number
3. Tax code (e.g., M, M SL, SH)
4. Whether you have a student loan
5. Signature and date

You can download a blank IR330 from ird.govt.nz if your employer does not provide one. You can change your tax code at any time — just give your employer a new IR330.

What Happens If You Use the Wrong Code

Using M for a Second Job (Too Low)

If you use code M for a second job, each employer taxes your income as if it starts from $0. At year end, IRD combines your income and finds you underpaid — you receive a tax bill.

Example:

• Main job: $55,000 (correctly taxed at M)
• Second job: $15,000 (incorrectly taxed at M — taxed as if $0–$15,000 at low rate)
• Correct combined tax: 30% applies to the second job income
• Tax underpaid: potentially $1,500–$2,000 to repay

Using Too High a Secondary Code

You overpay through the year and receive a refund — but you’ve had less take-home pay all year. This is inefficient but carries no penalty.

Independent Earner Tax Credit (IETC) and Tax Code ME

The ME code delivers the IETC through your wages by reducing the PAYE withheld. The IETC is worth up to $520/year for eligible earners.

You qualify for ME if:

• You have only one source of income
• Income is between $24,000 and $48,000 from all sources
• You do not receive Working for Families
• You do not have a student loan (if you do, use ME SL)

If you earn between $44,000 and $48,000, the IETC abates — ME partially delivers the credit.

See our Independent Earner Tax Credit (IETC) guide for full details.

Student Loan and Tax Codes

If you have a NZ student loan, add SL to your tax code. Your employer deducts student loan repayments in addition to PAYE.

Standard repayment rate: 12 cents per dollar earned above the repayment threshold ($22,828 annual income as at 2026).

If you have a repayment deduction exemption (e.g., you are overseas-based), do not add SL.

Special Tax Codes — Applying for a Reduction

If your standard tax code withholds too much PAYE relative to your expected annual tax (for example because you have significant rental losses), you can apply to IRD for a Special Tax Code (STC).

When a Special Tax Code Is Useful

• You have rental property losses that will significantly reduce your taxable income
• You earn schedular payments from multiple sources and standard codes overtax you
• You have large charitable donation credits expected at year end
• You are on ACC payments and returning to work part-time

How to Apply

1. Log in to myIR → Profile → Tax codes → Apply for a special tax code
2. Provide a forecast of your income, expected deductions, and expected tax for the year
3. IRD calculates an appropriate reduced withholding rate
4. Your employer applies the STC rate instead of the standard code

STCs are issued for one tax year and must be renewed annually. They’re appropriate for complex situations — simpler cases are better handled through year-end assessments or IR3 filing.

Tax Codes for Contractors and Schedular Payments

Contractors who receive schedular payments (rather than PAYE wages) are subject to withholding tax rather than PAYE. The default withholding rates for various activity types are set in the Income Tax Act.

Common schedular payment rates:

Contractors can apply to IRD for a reduced withholding rate (e.g., if they have significant deductible expenses) via a certificate of exemption or variation certificate. Without a certificate, the standard rate applies.

Tax Codes for Working Holiday Makers

Working holiday visa holders are treated as NZ tax residents if they are in NZ for more than 183 days in a 12-month period. In that case, standard PAYE tax codes apply.

For shorter stays:

• Use code M for employment income (same as residents)
• Non-residents may be subject to a flat 15% non-resident withholding tax on some income types

If you’re on a working holiday in NZ, provide an IR330 to your employer with your IRD number and code M. Apply for an IRD number at the Post Shop or online at ird.govt.nz.

Employer Obligations — Checking Your Tax Code

As an employer, you must:

1. Give each new employee an IR330 form before their first payday
2. Apply the tax code stated by the employee — you cannot override it
3. If an employee provides no IR330, deduct at the no-notification rate (45%)
4. Keep the completed IR330 on file for 7 years

If an employee provides an incorrect code (e.g., M for a second job), the liability for the resulting underpayment rests with the employee, not the employer — provided you applied the code they stated. However, good practice is to query obvious errors (e.g., an employee who clearly has a second job using code M for both).

Tax Code Lookup — Quick Decision Table

Add SL to any code if you have a student loan.

Frequently Asked Questions

I have two jobs. Which one is my main job?

Your main job is typically the one paying the most, or where you work the most hours — not necessarily the one you’ve had longest. If income from both jobs is similar, designate whichever you prefer as main. Assign code M (or ME) to the main job and a secondary code to the other.

My employer asked me to complete an IR330. What do I put for tax code?

Use code M for your main job (assuming no student loan and income over $14,000). If you have a student loan, use M SL. If your income is $24,000–$48,000 and you want the Independent Earner Tax Credit, use ME.

I changed jobs mid-year. Do I need to re-complete an IR330?

Yes — provide your new employer with an IR330 at the start of employment. Consider your combined income from both the old and new employer to ensure you use the correct tax code for the new role.

What is the no-notification rate?

If you don’t provide an IR330, your employer must deduct at 45% — the highest PAYE rate. This is a safeguard against underpayment, but it means you’ll significantly overpay during the year and receive a large refund at year end. Always provide an IR330 to avoid this.

Related Guides

• Secondary Income Tax NZ
• Independent Earner Tax Credit (IETC)
• PAYE Calculator
• Student Loan Repayments and PAYE
• Employment Tax Home